Germany's healthcare system explained

Overview of the German healthcare system

Germany’s healthcare system is a dual public-private system that’s largely regarded as one of the better systems in the world.

In Germany, healthcare is funded by statutory contributions, which therefore entitles German citizens to free healthcare (Gesetzliche Krankenversicherung). In addition to this, you can also take out private health insurance (Private Krankenversicherung) to replace or top-up the cover that’s offered by the state. There are many players involved when it comes to running the healthcare system, but at the top level it’s the Federal Ministry of Health that develops the health policy in the country – and it’s regulated by the Joint Federal Committee.

The Euro Health Consumer Index, which started in 2005 and assesses the performance of national healthcare systems in 35 countries around Europe, ranked Germany 12th in its latest publication in 2018.

From this report, their findings were that “Germany has traditionally had what could be described as the most restriction-free and consumer-oriented healthcare system in Europe – with patients allowed to seek almost any type of care they wish – wherever they want it (stronger on quantity than on quality). The traditional weakness of the German healthcare system: a large number of rather small general hospitals not specialising – resulting in mediocre scores on treatment quality, seems to be improving.”

The basic principles of the German healthcare system

With a population of approximately 83 million people, providing healthcare to the whole of Germany is no easy task. Health expenditure exceeded €440 billion in 2020 which is a 13.1% share of GDP and equates to €5,298 per inhabitant.

You now know that the healthcare system in Germany is financed by statutory and private health insurance, so let’s take a look at the five principles this system is based on.

Mandatory insurance

As of 2019, everyone registered as a resident in Germany must have statutory health insurance. If someone’s income is below a certain level, then they’re required to make statutory health insurance payments. However, if their income is above this threshold, they can continue to make these payments on a voluntary basis – or choose to take out private health insurance.

There are other circumstances where certain groups of society may be exempt from mandatory health insurance payments regardless of what they earn, such as civil servants.

Financed by contributions

Whether you pay statutory health insurance or private health insurance, health care in Germany is mostly financed from the contributions – paid by employees and employers. The main difference here is that statutory health insurance is based on a person’s salary, whereas private contributions are dependent on someone’s health, age, individual risk, and type of coverage they select. People insured privately may also be subsidised by their employer or pension fund.

For those that are unemployed or receiving social security benefits, their contributions tend to be paid by the relevant benefits agency.

Principle of solidarity

All of those with statutory health insurance carry the costs of medical care for anyone that pays into this system. Everyone who pays statutory health insurance has the right to the same amount of medical care – regardless of their income and contributions. This means that those less fortunate are helped by people with larger incomes, and the healthy are helping to pay for the treatment of those that are ill, as contributions are always calculated by income.

Self-administration

While the German state sets the conditions for medical care and its responsibilities, the detailed organisation and financing of healthcare services is the responsibility of self-governing bodies within the German healthcare system. This involves determining what medical treatments, operations, and medicines are financed by health insurance funds.

This self-administration is carried out by representatives of doctors, dentists, hospitals, health insurance, and psychotherapists. Within the statutory health insurance system, the highest level of self-governance is the Federal Joint Committee. Their role is to define guidelines for health services to which those covered by statutory health insurance are entitled.

No direct payment by patients

Finally, those covered by statutory health insurance will receive the required medical treatment – without having to pay the costs themselves. Hospitals, doctors, and pharmacies will charge any costs directly to the health insurance funds that have been collected. This means that people are effectively receiving free treatment at the time medical attention is required.

The health system in Germany is complex, but once you’ve familiarised yourself with these five basic principles, you’re well on your way.

Types of medical and nursing care

As is the case with many healthcare systems around the world, the range of treatment options is incredibly diverse. However, put simply, the German healthcare system is divided into inpatient and outpatient treatments. Here, we take a look at what treatments fall into which category, and the other main areas of medical care.

Inpatient care

Most hospitals in Germany treat everyone – regardless of whether the patient has statutory or private health insurance. Some hospitals are financed by the state or local municipality, charity organisations, or private companies. Patients have to be referred to a hospital by a doctor, unless of course it’s for an emergency – then treatment can be provided immediately.

If the treatment requires an overnight stay in a hospital, then this is referred to as inpatient treatment. At this point, additional fees may be required for accommodation and meals if it’s not covered by the statutory insurers. The patient is always made fully aware of exactly what’s covered before the treatment is carried out.

Outpatient care

Provided by general practitioners, specialists, dentists, and psychotherapists – as well as other healthcare professionals who tend to be self-employed. Anyone offering treatment would’ve needed to be approved on the basis of contracts with statutory health insurance funds and members of relevant corresponding associations. Most doctors and dentists will have statutory health insurance accreditation.

In Germany, most people when they’re ill will consult their family doctor first, who is then able to refer someone to the right kind of specialist – depending on the medical treatment that’s required.

Outpatient care also includes medical care received in the hospital that doesn’t involve an overnight stay.

Visiting a specialist doctor in Germany

It has become commonplace and standard for a GP (general practitioner) or family doctor to become the first point of contact in diagnosis and treatment. They are capable of handling most general health requests, and delegating diagnosis/consultation/treatment processes to others, when their expertise is insufficient.

So, if your health situation needs to be addressed by a more knowledgeable and relevant specialist, a referral or transfer will be needed in most cases. The exceptions to this are:

• Visits to an orthopedist

• Visits to a gynaecologist

• Any lab screenings

• MRIs

• X-rays

• Other major scans/tests.

It’s also important to keep in mind that the basic government health package generally doesn’t cover things that are optional or related solely to personal preference. For example, if you go to a dentist, basic procedures promoting the health of your teeth should be covered, but you won’t just be able to get the finest crowns and dentures for free.

Similarly, beauty procedures (like plastic surgery) usually fall more into the realm of private insurance if they do not directly correlate to your health and physical wellbeing.

Provision of medicines

When a prescription has been administered by a doctor, this will then get taken to the pharmacy. The health insurance fund pays the majority of the costs of prescription medicines, but statutory health insurance patients will still have to pay a supplementary charge – unless you’re under the age of 18. There are also various caps depending on the circumstances of the patient, such as those with chronic illnesses.

Due to regulation, the cost of a certain type of medicine is the same in every pharmacy in Germany.

Nursing care

If someone in Germany is physically or mentally unable to take care of themselves, they’re entitled to nursing care. Since 1995, long-term care insurance has been mandatory for everyone – whether you have statutory or private health cover. However, if you do have statutory health insurance, then this is financed equally between employers and employees.

Unfortunately, long-term care insurance doesn’t cover all the costs of nursing care – this needs to be covered by the people being cared for, or relatives.

Promotion of healthy living

The health system in Germany dedicates resources to preventing illnesses and promoting healthy living. The aim of this is to encourage people to eat a balanced diet, exercise, manage stress levels, and other beneficial life habits.

Part of this initiative is encouraging statutory and private insurers to support German citizens to be healthy in the environments in which they live – nursery, primary, and secondary schools, workplaces, residential care homes, and so on. This can range from sharing information about the dangers of smoking and alcohol abuse to general hygiene.

Rehabilitation centres

Unfortunately, some serious illnesses can have a long-term impact on someone’s life and require additional therapy. There is a wide range of rehabilitation services available to help people resume a normal life as quickly as possible, which is offered to both outpatients and inpatients.

The German healthcare system also provides rehabilitation centres for illnesses like eating disorders or addictions.

Additional healthcare services

Appointments, tests, and treatment are all essential components of any healthcare system, but there are always outliers and unique situations where it’s crucial for consumers to understand what kind of protection they have. Let’s go over a few examples:

• Prenatal care. Expecting mothers are provided a high level of care throughout pregnancy, including regular checkups, three ultrasounds, tests for numerous abnormalities, and free preparatory courses.

• Beauty procedures. Unfortunately, beauty procedures that do not directly impact the physical wellbeing of patients are generally not covered under public health insurance. However, private plans can make these procedures much more affordable.

• Lifestyle consultation. Patients are entitled to full coverage for consultation on lifestyle choices from relevant specialists adhering to the national health program and standards, but non-traditional forms of medicine (such as homeopathy, light/sound therapy, etc.) tend to be covered only out-of-pocket.

• Screening. German medicine has a proactive stance towards screening, and anyone enrolled in the public system can undergo it once in their youth (18-34), and every three years starting from the age of 35.

Pros and cons of the German healthcare system

The positives and negatives of the German healthcare system are incredibly complex, and a lot of it comes down to personal opinion. However, there are some aspects of the system that are easy to identify with regards to whether that particular aspect is seen as a pro or con.

Pros:

• Overall, a fully-functional healthcare system that’s regarded as one of the better systems in Europe – and also the world.

• A well-developed health insurance sector.

• Contributions to statutory health insurance are determined fairly by income.

• Private health insurance is also made available to those that prefer an alternative option. You can even combine both private and statutory options.

• Care tends to be to a high standard.

Cons:

• Overnight fees can apply to inpatients fairly regularly – as it's not included by many insurance companies.

• The higher your income, the more contributions you have to make. This can be seen as unfair by some individuals – especially if they’re relatively healthy and require less care.

• With a lot of private health insurance companies, you need to be living in Germany for two years or more.

• Like with many healthcare systems around the world, the Covid-19 pandemic had a huge impact on resources – which still remains a huge challenge.

• It’s illegal to not have health insurance if you live in Germany.

The German healthcare system: Facts and figures

• Health expenditure exceeded €440 billion in 2020 which is a 13.1% share of GDP and equates to €5,298 per inhabitant.

• The statutory health insurance system consists of 110 sickness funds covering around 88% of the population. Approximately 70 million residents in Germany.

• The current life expectancy for Germany in 2022 is 81.72 years.

• The biggest healthcare insurance provider in Germany is AOK. In 2018 the company and all its branches spread across Germany counted around 25 million clients. Individually, Techniker Krankenkasse (TK) is the biggest public health insurance provider in Germany. In 2018, around 10.4 million people had taken health insurance at TK.

• Germany has the highest expenditure on healthcare in Europe.

• In Germany, approximately 5.7 million people were working in healthcare in 2018.

• In 2018 there were 1,927 hospitals, 498,283 hospital beds, and 33.9 beds in intensive care per 100,000 inhabitants.

• In 2017 there were 3,414,378 people in need of nursing care, 764,648 employees in nursing homes, and 390,322 in mobile care services.

• Nearly 19.4 million residents in Germany received inpatient treatment during 2017. The average cost of inpatient treatment for every person in 2017 was €4,695.

• Less than 10% of hospitals’ expenditure is dedicated to outpatient care.

• The German healthcare system covers more than 80% of the pharmaceutical costs of its residents, thus being the most generous in the EU alongside Luxembourg.

• According to a report in 2021, Bavaria has the highest number of health facilities in Germany.

Costs of healthcare in Germany

As previously mentioned in the article, Germany’s citizens and residents are the main contributors to the public healthcare system. To be specific, 14.6% of an employee’s salary normally goes towards covering healthcare costs – and this makes up a huge fraction of total taxes. Half of the 14 percent is covered by the employer, but the amount of earnings after taxes and contributions should be discussed and calculated with each employer separately.

Looking at concrete figures, the highest possible personal contribution is €360/month for those earning €54K+ per year, but it can also be much lower. People unable to work are not able to contribute to the system, so do not pay any fee. The exception to this is unemployed people who are not eligible for benefits and can work yet choose not to.

When it comes to private insurance, there’s a lot more variability and unpredictability. While you do get more coverage with certain private packages, the premiums can really bite. A healthy young adult can easily pay 100-200€/month of supplementary insurance, but someone older and known to have a serious health problem might pay 10x more.

• Students: University students are lucky to receive the best rates – with individuals under 23 being charged about €117/month, while those older than 30 pay €120. International students also have a unique advantage in the aspect that private health insurance can be easily found in the ranges of €70-100/month.

• Foreign visitors: Those settling in Germany long-term are encouraged and obligated to apply for the public option – and EU residents can also get the full range of services with a valid EHIC card. As for tourists, they are advised to come to Germany with an active and comprehensive private policy, covering over €30,000 of medical expenses.

• Minors: The mechanism for children receiving medical care is quite similar to the one in place for adults – a GP addresses complaints from the patient (and in this case, their guardians too), before coming up with a treatment plan or referring the case to a more suitable specialist. Children’s healthcare is also helpful in the aspect that most medications are sold at a lower-than-normal rate below €10.

Life abroad with WorldRemit

There’s no doubt that Germany is a shining beacon to countries striving to provide their citizens with a high quality of healthcare. The system’s success is evident – starting with the broad range of services offered to people and illustrated by the high average life expectancy of 81. This metric alone has improved threefold over the past few decades, and we can only look optimistically towards the future.

Germany is a prime choice for comprehensive healthcare needs – whether you come from an affluent background, are a low-wage labourer, or somewhere in between. What is clear is that this system should take good care of you.

If you would like to get more insights about receiving and paying for services abroad, be sure to check out some of the other publications on the WorldRemit blog.

This communication is intended for marketing purposes only and does not constitute or provide legal, tax, investment or financial planning related advice.